Malaysia’s retail sector closed 2025 on a stronger note, with sales growth accelerating in December and reinforcing expectations of resilient consumer spending in 2026, according to a new report by BMI, a Fitch Solutions Company.
Citing data released by the Department of Statistics Malaysia (DOSM) on Feb 11, BMI said retail sales expanded 6.9% year-on-year in nominal terms in December 2025, up from 6.4% in November. After adjusting for inflation, real retail sales rose a robust 5.3% year-on-year during the month.
For the full year, retail sales grew by an average of 6.1% year-on-year in nominal terms and 4.6% in real terms, reflecting broad-based strength across sub-sectors. BMI noted that the food and beverages segment delivered particularly strong gains throughout 2025.
The firm attributed the sector’s solid performance to Malaysia’s stable labour market and improving consumer sentiment over the year.
Retail Sector Well Above Pre-Pandemic Levels
BMI’s analysis shows that Malaysia’s retail sector has significantly outperformed its pre-pandemic levels. When rebased to January 2019, nominal retail sales are now about 60% higher than before Covid-19 struck.
While inflationary pressures in 2022 and 2023 dampened real retail growth, the sector has since regained momentum. Real retail sales are currently about 45% above pre-pandemic levels, supported by easing price pressures and more structural growth drivers.
A six-month moving average analysis further underscores the sector’s resilience. Nominal retail sales growth is averaging 6.3% year-on-year, while real growth is averaging nearly 4.9%. The relatively narrow gap between nominal and real growth suggests inflation is no longer significantly eroding purchasing power.
New Post-Pandemic Growth Trend Emerging
According to BMI, both nominal and real retail sales have followed similar trajectories in the post-pandemic period — rebounding sharply before stabilising at a higher base.
Nominal sales are expanding at a faster pace than before the pandemic, while real growth has settled closer to structural trends. This indicates that while price effects boosted headline figures earlier in the recovery, underlying consumer demand remains intact.
2026 Outlook: Growth to Moderate but Remain Solid
Looking ahead, BMI maintains a positive outlook for Malaysia’s consumer sector in 2026.
The research house forecasts real household spending to grow 4.1% year-on-year in 2026, reaching RM975.3 billion (at 2010 prices). This would mark a significant increase from the pre-Covid 2019 level of RM779.7 billion.
However, spending growth is expected to face some constraints. High household debt levels and associated servicing costs may limit discretionary spending, particularly as BMI expects Bank Negara Malaysia to keep the overnight policy rate unchanged at 2.75% throughout 2026, offering little additional monetary relief.
That said, low inflation — projected to average 1.9% in 2026 — and a tight labour market are expected to underpin consumer resilience. BMI anticipates real wage growth will comfortably outpace inflation, supporting purchasing power and sustaining consumption momentum.
Overall, Malaysia’s retail performance at the close of 2025 reinforces expectations that domestic demand will remain a key pillar of economic growth heading into 2026.
